Russia's Mobile TeleSystems terminates tender for 8% eurobonds

By Jennifer Chiou

New York, Feb. 4 - Mobile TeleSystems OJSC said it called for the immediate termination of its tender offer for the $400 million of 8% senior eurobonds due Jan. 28, 2012 issued by Mobile TeleSystems Finance SA.

As previously reported, Mobile TeleSystems Finance's indenture trustee did not transfer interest payments due Jan. 28 on the subsidiary's 8% bonds despite Mobile TeleSystems Finance giving the trustee $16 million for the payment on Jan. 25.

According to a previous news release, the trustee refused to make the interest payments until it can confirm that a freezing order issued by the English High Court of Justice on Jan. 26 does not prevent the payment.

The company said that Mobile TeleSystems Finance is working to ensure that the interest is promptly paid to the noteholders and that the offer is now terminated due to concerns stemming from the order.

The total payment for the bonds was to be $2,135 for each $2,000 principal amount of bonds, including a consent payment of $20.00 for bonds tendered by Feb. 4, the consent date.

Consent bid for 8 5/8% bonds

The company did not mention changes to MTS International Funding Ltd.'s ongoing consent solicitation for its $750 million of 8 5/8% senior eurobonds due June 2020.

The purpose of the consent bid is to remove an event of default that might arise as a result of an arbitral award in favor of Nomihold Securities Inc. against the issuer and to modify the bonds to avoid a future event of default arising as a result of the award.

The early instruction deadline for submission of electronic voting instructions for the 8 5/8% eurobonds is 10 a.m. ET on Feb. 9. The final voting deadline is 10 a.m. ET on Feb. 11, and a meeting of bondholders will be held Feb. 15.

If the resolution passes, the issuer will pay an early instruction fee of $2.50 for each $1,000 principal amount for holders who vote in favor of the measure before the early deadline by delivering their electronic voting instructions. The late instruction fee is $1.00 per $1,000 principal amount for those who vote for the measure by the final instruction deadline.

The resolution requires a majority vote of at least three-quarters of the votes cast at the meeting. Any resolution will be binding upon all bondholders. Holders may vote electronically or by attending the meeting.

The solicitation started on Jan. 24.

The dealer manager for the tender offer and for both consent solicitations is Royal Bank of Scotland (+44 20 7085 8056, 203 897-6145 or liabilitymangement@rbs.com). The tender agent and tabulation agent is Bank of New York Mellon (+44 20 7964 4958 or eventsadmin@bnymellon.com).

The telecommunications provider is based in Moscow.

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